Grindmaster Corporation is a commercial beverage dispensing OEM rich with history. The company was founded in 1933 by Richard Schuman who designed and patented a line of coffee grinders. Over the last 70+ years, the organization has grown and expanded by way of product innovation and acquisition. The acquisitions include Crathco in 1988, American Metal Ware in 1995, and Wilch Manufacturing in 1996. The product lines now include coffee grinders, brewers, espresso, cappuccino, and frozen beverages. The organization has remained privately held and is currently owned by the Avenir Group, which purchased the company in 1985.

The corporate headquarters located in Louisville, KY retain centralized sales, accounting, customer service, technical support, and engineering functions. The purchasing function, however, was decentralized in the first quarter of 2005. The locations include manufacturing operations in Louisville and North Brook, IL in the United States and Thailand. The Canton, MA facility serves as a distribution site for the imported products either manufactured in Thailand or purchased abroad for resale. The total workforce is around 200 people, direct and indirect, and the annual revenues are less than $50million.

Grindmaster is like most organizations in the global economy striving to lower operating costs, introduce new products to the market, implement lean manufacturing and continuous improvement, and become more profitable while leveraging for future stability. The financial position of the company is somewhat vulnerable; however, a refreshed leadership team and a serious recognition of possible closure, the eagerness has zealously surfaced to significantly re-evaluate business processes, strategies, and policies to better the position of the company for long-term growth and success.

The company suffers from low margins on sales, excessive inventory including slow-moving and obsolete, and an inability to forecast sales and production requirements. Against traditional manufacturing mass-production philosophy, Grindmaster’s philosophy since the Avenir purchase has been to provide the customer custom products quickly at competitive pricing. This philosophy is catching on in industry, but requires flexibility in the manufacturing and distribution functions (Bish, Muriel, & Biller, 2005; Gosain et al., 2005; Graves and Tomlin, 2003).

One of the main challenges the organization faces is connecting the knowledge of functional support departments with the manufacturing and distribution facilities. Although all business units use the Baan ERP system, there is very little communication or collaboration between the varying departments and not all departments are required to use Baan. Each department stays in a reactionary mode dealing with problems and challenges independently. Furthermore, although the company has well over 200 years of collective history and experience, there has been and is no avenue for capturing and distributing lessons learned.

Grindmaster currently has a $9million investment in average monthly inventory with less than 3 inventory turns per year. This is again in large part due to the company philosophy to give the customer custom products at a competitive price without guarantee for future purchases. The purchasing directive has been to support sales by procuring whatever components are necessary while at the same time, purchase in quantities that offer the best cost per unit savings to keep total unit cost minimized. However, although all the acquired facilities use Baan, there is no consistency in the business process of part identification or standardization of part information. There are thousands of components in the database and thousands of suspect duplications.

In addition to poor component tracking, the sales department has been unable to provide accurate forecasts because of the characteristics of the customer base and the industry. Customer demand tends to be cyclical, seasonal, and unpredictable. The most information the operations team has to work with is that the summer months generally increase sales for the frozen beverage units and the winter months generally increase sales for the hot beverage units. Even that information is becoming harder to forecast as the company continually expands into other regions and countries that may have significantly different weather patterns than the United States.

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